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Piper Jaffray estimates Amazon will lose $50 per Kindle Fire - Page 6

post #201 of 234
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post #202 of 234
Quote:
Originally Posted by MacRulez View Post

I don't understand. How much iPad use involves having a group of people simultaneously touching the screen?

iPad? There might be a game or two.

I was stating that in reference to using them on 50" LCDs as a work table. They work but have limitations you have to aware of as a designer or user. Just like capacitance and gloves. Like I said, for an ebook reader it should be just fine for page flips and such.
post #203 of 234
"Amazon appears to be focusing on a product with superior content delivery"

I agree, I prefer Amazon's selection, but I wouldn't want to view any of it on that tiny screen. Guess I can't have the best of both worlds


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post #204 of 234
Quote:
Originally Posted by DustinX View Post

"Amazon appears to be focusing on a product with superior content delivery"

I agree, I prefer Amazon's selection, but I wouldn't want to view any of it on that tiny screen. Guess I can't have the best of both worlds

Sounds like your a videophile but any videophile would also have a blu-ray player which nowadays comes with Amazon streaming ( and Netflix too). Therefor your Amazin Prime membership would allow streaming on your 52" LEDTV in addition to your Kindle Fire. Problem solved.
Sadly AppleTV won't allow Amazon streaming.
post #205 of 234
Quote:
Originally Posted by nht View Post

Well no shit internet vendors beat brick and mortar on price.

Except that J and R is a brick and mortar store Sherlock.
and Barnes & Noble internet still sells at a higher price too.
post #206 of 234
Quote:
Originally Posted by iKol View Post

Except that J and R is a brick and mortar store Sherlock.

They have 2. Both in NYC. J&R probably does 90% of their business over the internet.

Barnes & Noble have 717 stores and 637 college bookstores across all 50 states and DC.

Quote:
Barnes & Noble internet still sells at a higher price too.

Lets take a look shall we? New releases as of 9/30 from the J&R site and the B&N site:

The Whole Love: J&R - $13.99, B&N - $15.83
Cole World: J&R - $10.99, B&N - $9.35
25 Years Sting: J&R - $118.99, B&N - $134.99/$109.15 (Marketplace)
The Journey: J&R - $13.49, B&N N/A
The Less You Know, the Better: J&R $13.99, B&N - $12.62
Music Is Better Than Words: J&R 13.99, B&N $12.03

And the appropriate one on which to stop:

Everything is Boring & Everyone is a F--king Liar: J&R - $11.99, B&N - $12.34/$8.82 (Marketplace)

Looks like B&N is cheaper as often than not Sherlock. Where they aren't you can likely find it from one of their affiliates for cheaper than J&R. Taking into account the affiliate prices J&R is cheaper ONCE off that list and has one more title than B&N. The rest of the time it's cheaper to use B&N's storefront.

Score: J&R 2, B&N 5
post #207 of 234
Quote:
Originally Posted by nht View Post

They have 2. Both in NYC. J&R probably does 90% of their business over the internet.

Barnes & Noble have 717 stores and 637 college bookstores across all 50 states a

Everything is Boring & Everyone is a F--king Liar: J&R - $11.99, B&N - $12.34/$8.82 (Marketplace)

Looks like B&N is cheaper as often than not Sherlock. Where they aren't you can likely find it from one of their affiliates for cheaper than J&R. Taking into account the affiliate prices J&R is cheaper ONCE off that list and has one more title than B&N. The rest of the time it's cheaper to use B&N's storefront.

Score: J&R 2, B&N 5

OK you did not just give me 7 hand selected titles and expect that to be statistically accurate?
Therefore here is one for u released just yesterday:
Transformers: Dark of the Moon Blu- Ray:
Best Buy $17.99
JandR. $16.99
B&N. $30.92

You do the math; I'll keep the savings Sherlock.
post #208 of 234
Quote:
Originally Posted by iKol View Post

Well it may be wrong to your ears but it's is both true and accurate. Simply Google "Barnes and Noble overpriced" and tell me what you come up with.
Sorry - you may know Apple info as a moderator at AI but your retail knowledge is inaccurate.

Also I only made one statement. Perhaps I should have said "one of the most" overpriced retailers. But whatever- Amazon undercuts them as does Jand R for physical music and video items.

I've been buying at B&N for more decades than you've likely been alive. I also buy from many other places. I have a member card, and that adds another 15% discount. Even Amazon isn't cheaper on many purchases. Most B&N stores don't even carry music and video. I don't buy from their website except for Nook books for my iPad.
post #209 of 234
Quote:
Originally Posted by MacRulez View Post

...only after they either plug it into a "truck" or drive 20 miles to an Apple store.


Upgrading implies that the device is already running, so upgraders still had to tether it to a "truck" at some point, and will have to tether it to a "truck" again to get the upgrade.


A server's a server, and the update you're downloading is the same update whether the device is able to handle it directly or is required to go through intermediary software on a "truck" like iTunes.

Are you suggesting that iOS 5 is unsafe?

I wouldn't think so.

It's a good thing that Apple is finally catching up to Android on this critically useful feature. But make no mistake about it: it's merely catching up. Apple does innovate in a great many areas, but they are not first in every one of them.

I don't understand any of your post. It's all kind of inane. You can't run any computer in a useful way these days without tethering in some way to a server on the internet. So your mentioning that is less than useful.

And you know that iOS is safer than Android by a mile. You also are being very simple in your reading of my post. I assume that's deliberate.
post #210 of 234
Quote:
Originally Posted by MacRulez View Post

I think nht is correct about the Kindle Fire - it does have a capacitive screen. The infrared tech you mentioned is used in the lower-priced Kindle Touch (an interesting way to solve that problem; thanks for bringing it to my attention).

Like I said, I hadn't read everything. In a couple of articles, the writers seemed confused as to whether the Fire had a cap screen or whether they used the Kindle Touch method. That's why I questioned it.
post #211 of 234
Quote:
Originally Posted by iKol View Post

Sounds like your a videophile but any videophile would also have a blu-ray player which nowadays comes with Amazon streaming ( and Netflix too). Therefor your Amazin Prime membership would allow streaming on your 52" LEDTV in addition to your Kindle Fire. Problem solved.
Sadly AppleTV won't allow Amazon streaming.

So I assume you carry your 50" screen and generator every time you might want to watch a video sitting somewhere out of your home?

Or even on a room of your place where the 50" isn't available? Or do you refuse to watch video unless it's on your 50" screen?

The whole point to the Fire is content consumption, and that includes music videos, Tv shows and movies. No one is just going to buy this for music and books. They can do that on a regular B/W Kindle.
post #212 of 234
Quote:
Originally Posted by iKol View Post

OK you did not just give me 7 hand selected titles and expect that to be statistically accurate?
Therefore here is one for u released just yesterday:
Transformers: Dark of the Moon Blu- Ray:
Best Buy $17.99
JandR. $16.99
B&N. $30.92

You do the math; I'll keep the savings Sherlock.

So, he gives seven, and you give one. So far, he wins.

Oh, and I just checked. $16.99 is the DVD. $19.99 is for the BluRay.
post #213 of 234
Never mind... what the fuck's the use.
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post #214 of 234
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post #215 of 234
Quote:
Originally Posted by Gatorguy View Post

If the article here at AI from a few days ago is generally accurate, and the new Kindle Fire is basicly RIM's Playbook with a slower processor, less memory and no camera, the estimated parts bill (who's estimate again?) of $180 may not be accurate.

Back in April, iFixit and TechInsights had teardowns, parts ID's and estimated costs for a few devices, including the Playbook. At that time the total parts cost for the 16GB version was $190. Unless parts prices have gone up quite a bit since April, if Amazon's 8GB, no camera, no multi-touch display and older processor Playbook-ish version should be quite a bit less than that, correct? No camera saves $15, about $8 savings on 8GB rather than 16, plus savings on both the touchscreen and processor (Playbook's item cost was $45 and $17). Would $12 total probably be a fair savings on those two components? If so that's at least $33 less, dropping the parts costs to somewhere around $155 rather than $180, and that's ignoring the minor savings from eliminating bluetooth/radio/gps components.

So assuming AI and it's sources were right, a big assumption perhaps, the cost numbers that some of these analysts are using may be much higher than the reality.

http://www.ubmtechinsights.com/uploa...ison_chart.JPG

http://www.redblackberry.com/blackbe...and-chipworks/

Interestingly, UBMTechInsights is making the same observations that I did to claim that the Fire is costing Amazon around $150, yielding a profit with each sale rather than a loss.

http://www.eetimes.com/electronics-n...mated--150-BoM
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post #216 of 234
Quote:
Originally Posted by MacRulez View Post


The idea that requiring a user to first buy a computer and then install iTunes on it before being able to turn the iPad from a brick into a tablet is insane.

You know something that's even more insane?

The idea that a user has to first buy a computer in order to turn an iPod shuffle into an mp3 player.
post #217 of 234
Quote:
Originally Posted by Gatorguy View Post

Interestingly, UBMTechInsights is making the same observations that I did to claim that the Fire is costing Amazon around $150, yielding a profit with each sale rather than a loss.

http://www.eetimes.com/electronics-n...mated--150-BoM

... and iSuppli puts the figure at $209.63.

Who are you going to believe.

As I said before..."What's the use?!".
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post #218 of 234
Quote:
Originally Posted by Gatorguy View Post

Interestingly, UBMTechInsights is making the same observations that I did to claim that the Fire is costing Amazon around $150, yielding a profit with each sale rather than a loss.

http://www.eetimes.com/electronics-n...mated--150-BoM

How do you justify that a $150 BOM means a $199 product is turning a profit?
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post #219 of 234
Quote:
Originally Posted by piot View Post

You know something that's even more insane?

The idea that a user has to first buy a computer in order to turn an iPod shuffle into an mp3 player.

OK.. i'll bite. How do you put music into an mp3 flash based device with no network connection without having to use a computer?
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post #220 of 234
Quote:
Originally Posted by MacRulez View Post

Give it a fresh read.

The idea that requiring a user to first buy a computer and then install iTunes on it before being able to turn the iPad from a brick into a tablet is insane.

If the distinction between a server that my service provider buys and maintains and a local computer that I need to buy and maintain isn't clear, you may want to review Steve Jobs' WWDC presentation where he explained how useful it will be to finally be able to activate an iPad without having to buy a computer first.

Well, if you ignore what I've said, which is that you didn't always need to do that, then fine, try to make the distinction.

But it's all rather moot, as you know, because it's no longer the case as of the 14th. That will be the last time anyone needs to use a computer, even if you have an older model. So there's really no point in talking about this anymore.
post #221 of 234
Quote:
Originally Posted by Gatorguy View Post

Interestingly, UBMTechInsights is making the same observations that I did to claim that the Fire is costing Amazon around $150, yielding a profit with each sale rather than a loss.

http://www.eetimes.com/electronics-n...mated--150-BoM

Even if that unlikely number were correct, it isn't the full cost, as we constantly have to bring up. That is just the direct parts cost, not including the manufacturing cost which adds at least $10 to that. Then, again as you love to fail to notice, there are all the other costs involved in the R&D, and running the company, which these silly numbers given out don't include. No matter how you look at it, there would be, if you want to use this number, which is far off from other estimates, a total cost to the company of at least $200. To that must be added another number to come up with a profit. So at the very best, they are breaking even, and at the very worst, losing $60 per.
post #222 of 234
Quote:
Originally Posted by melgross View Post

Even if that unlikely number were correct, it isn't the full cost, as we constantly have to bring up. That is just the direct parts cost, not including the manufacturing cost which adds at least $10 to that. Then, again as you love to fail to notice, there are all the other costs involved in the R&D, and running the company, which these silly numbers given out don't include. No matter how you look at it, there would be, if you want to use this number, which is far off from other estimates, a total cost to the company of at least $200. To that must be added another number to come up with a profit. So at the very best, they are breaking even, and at the very worst, losing $60 per.

Your guess is as good as mine Mel
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post #223 of 234
Quote:
Originally Posted by snova View Post

OK.. i'll bite. How do you put music into an mp3 flash based device with no network connection without having to use a computer?

How many people had to rush out and BUY a new PC/Mac just so they could load music onto there brand new iPod shuffle?
post #224 of 234
Quote:
Originally Posted by solipsism View Post

How do you justify that a $150 BOM means a $199 product is turning a profit?

Amazon isn't stupid like all of you seem to think. I could see ownership of an amazon tablet further locking in purchases from them on more than just ebooks. Regarding high manufacturing cost, it should eventually come down, but this seems to be aimed at locking in business through Amazon. It's a different approach from using the hardware itself as the profit generator. I know there have been comments about high margins on tablets and low margins on ebooks, but it seems to be more like high margins on the ipad specifically, rather than tablets in general.
post #225 of 234
Quote:
Originally Posted by hmm View Post

Amazon isn't stupid like all of you seem to think. I could see ownership of an amazon tablet further locking in purchases from them on more than just ebooks. Regarding high manufacturing cost, it should eventually come down, but this seems to be aimed at locking in business through Amazon. It's a different approach from using the hardware itself as the profit generator. I know there have been comments about high margins on tablets and low margins on ebooks, but it seems to be more like high margins on the ipad specifically, rather than tablets in general.

Who said Amazon is stupid? And your comment has nothing to do with the claim that a $150 BOM means a $50 net profit for each Amazon Kindle Fire, a product I hbe expressed many times that I think will be great for Amazon and Apple's bigger threat in the tablet market.
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post #226 of 234
Quote:
Originally Posted by solipsism View Post

Who said Amazon is stupid? And your comment has nothing to do with the claim that a $150 BOM means a $50 net profit for each Amazon Kindle Fire, a product I hbe expressed many times that I think will be great for Amazon and Apple's bigger threat in the tablet market.

My bad I think I got off track there and meant to quote a couple other posts in there as well It was also supposed to be like "many" rather than all. I'm clearly way too tired today. Anyway if the volume is high enough, it might inch the manufacturing cost down a bit. There were a few posts which suggested that amazon sales wouldn't cover a thin margin or loss on the tablets and suggested tablets as a higher margin item even though Apple is the only one who seems to have succeeded in selling them at such an exceptional margin in the form of the ipad, and this is at least a well thought out alternative rather than what we saw with HP where it seemed to be just about getting something to market.

I think they'll profit from these on the back end. If they can get manufacturing costs to around a break even point at least after a while, it may very well end up as a big win for amazon.
post #227 of 234
Quote:
Originally Posted by solipsism View Post

And your comment has nothing to do with the claim that a $150 BOM means a $50 net profit for each Amazon Kindle Fire, a product I hbe expressed many times that I think will be great for Amazon and Apple's bigger threat in the tablet market.

I didn't claim they'd make a $50 profit. The extent of my suggestions was that the BOM wasn't as high as the $200+ that some others have guessed, and that if the $150 was more accurate they would make a profit on device sales. Certainly not $50 tho.
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post #228 of 234
Quote:
Originally Posted by poke View Post

Anybody who thinks Amazon loses money on these things is insane. Who the hell loses money on a high margin product (tablets) in order to support a no-margin business (online retail)?

It's called a LOSS LEADER. Very common strategy in business.

http://en.wikipedia.org/wiki/Loss_leader

That said, I have a hard time believing there is a $50 loss on each device.
post #229 of 234
Quote:
Originally Posted by mgsarch View Post

It's called a LOSS LEADER. Very common strategy in business.

http://en.wikipedia.org/wiki/Loss_leader

That said, I have a hard time believing there is a $50 loss on each device.

I guess everyone missed the part where I mentioned that iSuppli puts the cost of parts at $209.63.
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post #230 of 234
Quote:
Originally Posted by Gatorguy View Post

Your guess is as good as mine Mel

No, my *guess* is much better than yours, as it's supported by understanding how businesses work, while yours is just something that ignores that. I suppose you never think about the difference between gross margins, operating margins, and net margins. In your scenario, operating margins don't exist.
post #231 of 234
Quote:
Originally Posted by hmm View Post

Amazon isn't stupid like all of you seem to think. I could see ownership of an amazon tablet further locking in purchases from them on more than just ebooks. Regarding high manufacturing cost, it should eventually come down, but this seems to be aimed at locking in business through Amazon. It's a different approach from using the hardware itself as the profit generator. I know there have been comments about high margins on tablets and low margins on ebooks, but it seems to be more like high margins on the ipad specifically, rather than tablets in general.

The problem is that Amazon can't "lock in" purchases. People will buy what they want, from whomever they want. Amazon can't prevent that. And the iPad doesn't have a large margin. It has a margin of 30%, which is considered modest. The problem is that other tablet manufacturers have even lower margins because they can't get their supply line costs as low as Apple has. So they intro tablets at the same price as Apple, and yet have low margins. Introduce then at a lower price, assuming the tablet is as well made, and they may have almost no margin at all.

So we see lower priced, but cheaply outfitted and made tablets. Or we see companies coming out with smaller tablets which cuts the costs down. But they aren't equivalent because they are smaller. So, what can they do? If Amazon sold this tablet for $300, which they likely needed to do to ensure a decent profit, it wouldn't sell. They really are taking a chance here.

But Amazon is always willing to lose profits to gain marketshare. This has been a criticism of them going back years, and is responsible for their very low 3.37% profit last year. It will be interesting to see where their profits go if they sell a lot of these. But we may never know how many they sell, since after years, we still don't know how many Kindle's they sell.
post #232 of 234
Quote:
Originally Posted by melgross View Post

No, my *guess* is much better than yours, as it's supported by understanding how businesses work, while yours is just something that ignores that. I suppose you never think about the difference between gross margins, operating margins, and net margins. In your scenario, operating margins don't exist.

I've taken those into account Mel. I still run a business.

iSuppli's teardown figure, the one you seem to depend on rather than the TechInsights breakdown, includes manufacturing costs of approx. $18. Add that to the $150 BOM from my (and TechInsights) estimate and that still leaves over $30 for miscellaneous costs. So it really comes down to whose estimated BOM is more accurate, making your guess as good as mine.

http://www.isuppli.com/Teardowns/New...ize-Sales.aspx
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post #233 of 234
Quote:
Originally Posted by hmm View Post

My bad I think I got off track there and meant to quote a couple other posts in there as well It was also supposed to be like "many" rather than all. I'm clearly way too tired today. Anyway if the volume is high enough, it might inch the manufacturing cost down a bit. There were a few posts which suggested that amazon sales wouldn't cover a thin margin or loss on the tablets and suggested tablets as a higher margin item even though Apple is the only one who seems to have succeeded in selling them at such an exceptional margin in the form of the ipad, and this is at least a well thought out alternative rather than what we saw with HP where it seemed to be just about getting something to market.

I think they'll profit from these on the back end. If they can get manufacturing costs to around a break even point at least after a while, it may very well end up as a big win for amazon.

Again, Apple's margin on the iPad is modest. Don't throw figures around when you are just making assumptions. They do make a 50% margin on the iPhone, which is in line with other goods of that nature. They make 40% margins on iMacs, Mac Pro's and MacBook Pro's, and somewhat less on MacBook Airs.

But they just make a 20% margin on iPods, though the Touch is higher. You can either get this info from their financials directly, or by understanding how to extract the numbers from reading the entire report. This analysis is done every quarter.
post #234 of 234
FYI.

The same iSuppli that estimated Kindle Fire costs at $209, give the iPad2 32GB GSM version estimated manufacturing costs of $336 and the CDMA model at $333. Actual costs could be much less than that as forum members often suggest Apple gets much better component price breaks than others. At $599 list, Apple's probably not suffering too much on margins.

http://www.isuppli.com/PublishingIma..._iPad2_BOM.png
http://www.isuppli.com/teardowns/new...sis-shows.aspx
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